The Cold War of the Search Engine Marketing Industry

It’s a done deal. Google has officially acquired YouTube for$1.65 billion in stock. The staff and the brand will be untouched. The experts, however, are divided on whether or not this is a smart move for Google.

No matter what the ultimate answer to that question is (or even if there is one), we are witnessing a cold war of the search engine marketing industry.

We have three Internet giants, each with its own sphere of influence, aiming for world domination. We usually tend to think of their actions as a part of the grand strategy, described by Google as a drive to organize all of the world’s information. But when I follow the developments in the industry, I can’t help but feel that most of their actions are not active, but rather reactive.

Sometimes they act according to the grand strategy of building the best search engine or the best email service but other times their actions are determined by what rivals do. Microsoft was in talks with MySpace. Google rushed in, overpaid and closed the deal. Microsoft looked into Facebook; Yahoo made a ridiculous offer of $1 billion to acquire the social networking site. Now, it is not that difficult to imagine that either Yahoo or Microsoft (or both) were eyeing YouTube. Maybe all of these deals make sense, but it seems to me that the giants are being forced into buying these sites.

Why buy YouTube if you are not planning to use its technology? Why not just partner up, put contextual ads there and ultimately get more value? Probably because that raises the possibility that YouTube might make the same deal with multiple search engines, no matter how strictly you construct the partnership.

So in a sense, asking why Google bought YouTube is like asking why the US went into Vietnam. The answer is simple: to stop the spread of communism. So why did Google buy YouTube? To stop the spread of Yahooism or Microsoftism. [Side Note From Frances - let's just hope they don't let the draft dodgers of this war have asylum in Canada LOL.]

Of course, many will argue that this is normal corporate behavior. After all, it’s a dog-eat-dog world. The question is at which point did these giants stop looking after their users and investors and started wasting money on pointless acquisitions?

About the Author

Andrey Milyan was the first editor-in-chief of Search Marketing Standard, the leading print publication covering the search marketing industry. He has been following and reporting on industry developments for over 10 years. Andrey now works in the paid search sector of a prominent search marketing agency.

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One Comment

ChrisOctober 14, 2006 at 11:31 pm

It seems to me that Google is taking a huge risk with the YouTube acquisition in a lot of ways, not the least of which is the issue of copyright. Half the stuff on YouTube is copyright material that has been posted there without permission - this is going to be a version of Snakes on the Plane that Google may very well find difficult to resolve.